How Do I Know What Tax Bracket I Am In?

Tax brackets. You hear a lot about them come tax season yet very few people can describe them accurately.

However, it is very important that you understand your tax bracket. It not only determines what type of tax you will owe the IRS but also helps factor in certain deductions and credits.

Get the tax help you need today to answer your tax return questions.

What is a Tax Bracket?

The United States enforces what is known as a ‘progressive tax system.’ It is a fancy way of saying that people with higher taxable incomes generally pay more in federal income taxes based on their tax bracket rate.

It helps separate the American people based on the money they earned not only from jobs over the course of one year but other types of taxable income as well.

There are a few important things you need to understand about tax brackets:

  • Being in a tax bracket does not mean you pay that specific federal income tax rate on every source of your income.
  • The U.S. government determines how much tax you owe by dividing your taxable income into chunks, or tax brackets, with each chunk getting assigned its own corresponding tax rate.

The good news is even if you earn enough income to be in the 22% bracket for one type of earnings, you are not always taxed that same amount for other types of income you report.

New Tax Bracket Rules

In case you didn’t already know, federal income tax received a major overhaul for the 2018 tax year thanks to legislation known as the Tax Cuts & Jobs Act.

Among its many changes, the Tax Cuts & Jobs Acts altered seven different tax brackets, so even if you had a clear understanding of your tax bracket in the past, it is a good idea to get a refresher. The tax brackets that were altered based on the Tax Cuts & Jobs Act are 10%, 12%, 22%, 24%, 32%, and 37%.

2019 Federal Income Tax Brackets

Now that the deadline for 2018 taxes has passed, it is time to look towards April 2020. Here is what you can expect from the following tax brackets:

Single Filers

  • 10%: Taxable income bracket from $0 to $9,700. Taxes owed = 10%.
  • 12%: Taxable income bracket from $9,701 to $39,475. Taxes owed = $970 plus 12 percent of the amount over $9,700.
  • 22%: Taxable income bracket from $39,476 to $84,200. Taxes owed = $4,543 plus 22% of the amount over $39,475.
  • 24%: Taxable income bracket from $84,201 to $160,725. Taxes owed = $14,382.50 plus 24% of the amount over $84,200.
  • 32%: Taxable income bracket from $160,726 to $204,100. Taxes owed = $32,748.50 plus 32% of the amount over $160,725.
  • 35%: Taxable income bracket from $204,101 to $510,300. Taxes owed = $46,628.50 plus 35% of the amount over $204,100
  • 37%: Taxable income bracket from $510,301 or more. Taxes owed = $153,798.50 plus 37% of the amount over $510,300.

Married, Filing Jointly

  • 10%: Taxable income bracket from $0 to $19,400. Taxes owed = 10%
  • 12%: Taxable income bracket from $19,401 to $78,950. Taxes owed = $1,940 plus 12% of the amount over $19,400.
  • 22%: Taxable income bracket from $78,951 to $168,400. Taxes owed = $9,086 plus 22% of the amount over $78,950.
  • 24%: Taxable income bracket from $168,401 to $321,450. Taxes owed = $28,765 plus 24% of the amount over $168,400.
  • 32%: Taxable income bracket from $321,451 to $408,200. Taxes owed = $65,497 plus 32% of the amount over $321,450.
  • 35%: Taxable income bracket from $408,201 to $612,350. Taxes owed = $93,257 plus 35% of the amount over $408,200.
  • 37%: Taxable income bracket from $612,351 or more. Taxes owed = $164,709.50 plus 37% of the amount over $612,350.

Married, Filing Separately

  • 10%: Taxable income bracket from $0 to $9,700. Taxes owed = 10%
  • 12%: Taxable income bracket from $9,701 to $39,475 . Taxes owed = $970 plus 12% of the amount over $9,700.
  • 22%: Taxable income bracket from $39,476 to $84,200. Taxes owed = $4,543 plus 22% of the amount over $39,475.
  • 24%: Taxable income bracket from $84,201 to $160,725. Taxes owed = $14,382.50 plus 24% of the amount over $84,200.
  • 32%: Taxable income bracket from $160,726 to $204,100. Taxes owed = $32,748.50 plus 32% of the amount over $160,725.
  • 35%: Taxable income bracket from $204,101 to $306,175. Taxes owed = $46,628.50 plus 35% of the amount over $204,100.
  • 37%: Taxable income bracket from $306,176 or more. Taxes owed = $82,354.75 plus 37% of the amount over $306,175.

Head of Household

  • 10%: Taxable income bracket from $0 to $13,850. Taxes owed = 10%
  • 12%: Taxable income bracket from $13,851 to $52,850. Taxes owed = $1,385 plus 12% of the amount over $13,850.
  • 22%: Taxable income bracket from $52,851 to $84,200. Taxes owed = $6,065 plus 22% of the amount over $52,850.
  • 24%: Taxable income bracket from $84,201 to $160,700. Taxes owed = $12,962 plus 24% of the amount over $84,200.
  • 32%: Taxable income bracket from $160,701 to $204,100. Taxes owed = $31,322 plus 32% of the amount over $160,700.
  • 35%: Taxable income bracket from $204,101 to $510,300. Taxes owed = $45,210 plus 35% of the amount over $204,100.
  • 37%: Taxable income bracket from $510,301 or more. Taxes owed = $152,380 plus 37% of the amount over $510,300.

How to get a lower tax bracket?

In order to reduce your tax liability, there are ways that you can improve upon your tax bracket. The two most common ways are via tax credits or tax deductions.

Tax credits are more preferred as they reduce the amount of tax you owe and do not affect the bracket you are in, while tax deductions reduce how much of your income is subject to taxes. It lowers your taxable income by the percentage of your highest federal income tax bracket. It is a little more complicated to correctly calculate tax deductions but it can still deliver you savings in the long run.
To get more assistance regarding your tax bracket and its calculations, contact Levy & Associates by visiting www.levytaxhelp.com

Contact Levy & Associates for Dependable Tax Audit Services

Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.

There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.

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